Trading Up

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff?s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York.

When Ziba beauty opened, in 1986, it was hardly a sophisticated retail operation. The family-run beauty salon worked out of a converted storage area in a building in the Little India neighborhood of Artesia, California. It later moved to a cramped storefront, where the waxing room was nothing more than a makeshift bed surrounded by a shower curtain. Owner Kundan Sabarwal and her staff (who call her Auntie Kelly) specialized in threading, an ancient form of hair removal that involves rolling a cotton thread over unwanted hairs and gently pulling out a row at a time. Ziba also did henna tattoos and hair and makeup for bridal parties.

Despite its modest digs, the business built a loyal following. On most Saturday mornings, the line of customers -- mostly South Asian women -- stretched out the door, and by 2001, revenue reached $2.5 million. Auntie Kelly had built a dependable business that could support her family.

But her daughter Sumita Batra wanted more. She believed threading was poised to enter the mainstream. "Despite our lack of infrastructure and customer service skills, we had all the markers of success," Batra says. "We had long waits and a very loyal group of customers who kept asking us to open in their city. So I followed my gut." In 2002, she set her mom's business on an ambitious plan to expand to multiple locations, including high-rent shopping malls.

Selling the concept to shopping-center managers didn't prove as easy as Batra had hoped. For example, she found herself settling on a space in a strip mall in Santa Ana when she couldn't get into an upscale shopping center nearby. The new locations did succeed in drawing a broad clientele, however. Customers at the Rancho Cucamonga location skewed more white; in Redondo Beach, more African American. And Ziba's name was gaining recognition, especially after Batra was hired to create henna tattoos for stars such as Madonna and Gwen Stefani.

By 2005, Ziba Beauty was up to five stores, producing $5 million in sales. But Batra was still not satisfied. The stores lacked uniformity and took too long to construct, and the look wasn't as polished as she would have liked. That's when Batra persuaded her family to go to the bank, borrow $2.8 million, and hire a team of pros to help complete the metamorphosis from storefront to mallworthy chain. Her mom wasn't thrilled with the idea of taking on debt, but she eventually gave Batra her blessing. "I'm very conservative," says Sabarwal, "but today's generation believes more in borrowing and moving forward."

Batra subsequently hired two retail veterans to reimagine the Ziba brand. Jas Nakaoka is an architect whose clients have included Forever 21, a women's apparel chain. Mario Ciampi spent 14 years at the Children's Place, a New Jersey apparel retailer that grew to 900 stores during his time there.

The retail pros were impressed with how much Batra, who became the CEO of the company in 2006, had accomplished. Nakaoka and Ciampi were struck by the quality of Ziba's marketing materials, for example. "When I looked at their website, I thought it was a much bigger company," Ciampi says.

They also agreed with Batra that Ziba was that rarity in the world of specialty retail: a novel concept. Research unearthed only one other upscale threading business, Shobha, which now has three locations in New York. "Everyone in the shopping-center community is looking for the next big thing, whether it's the Apple store or Bare Escentuals, to make them a little different from the mall next door," says Ciampi. "But I was unaware that anyone was performing this service or branding it in a way that was special. It was almost as though she was branding threading itself." But what exactly should that brand be like?

Looking at the stores, Nakaoka and Ciampi came to several conclusions. They thought Ziba devoted too much floor space to ancillary services like bridal hair and makeup, given that threading accounted for 90 percent of revenue. They thought the Ziba name and the company's logo competed with each other. And they thought it was a mistake for the store exteriors to adopt an ersatz Indian look. "At the time, the Indian look was very much in vogue -- peasant blouses, crinkle fabrics, and so on -- but I thought Ziba's stores had to be about beauty, not that we're Indian," Nakaoka says.

Together, Batra, Nakaoka, and Ciampi developed a new store concept (it's explained in "Ziba Beauty: Five Steps to a Retail Makeover"). The company remodeled the Santa Ana store in January 2007. By June, that location had recouped the cost of the remodeling. Through the fall, Ziba opened five new stores featuring the updated look.

Besides the store design, Batra tinkered with the business in other ways. She raised the price of a basic treatment to $11 from $9. "I was terrified, but we haven't seen a single customer walk away," she says. She also asked her staff to sign employment contracts. This blew up in her face when some unhappy workers filed a lawsuit claiming they were due back wages.

Despite these headaches and the $2.8 million in debt, the makeover appears to have paid off. Ziba cleared $10 million in sales in 2007 and is on track to hit $12 million this year, at a time when many mall-based chains are struggling.

There are those who worry that the redesign has made the business's image a little too homogenous. When asked by Inc. to assess the new look, Lorenzo Apicella, a partner in the San Francisco office of the design firm Pentagram, says it's "generally sharper and cleaner," but he wishes some of the Indian "vernacular" remained. "The leap into the future and acknowledging your roots aren't mutually exclusive," Apicella says.

Batra understands the feedback, but she prefers Ziba's new aesthetic. "I really believe in this concept," she says. For the record, Auntie Kelly approves, too.